Calendar Week 14-2023

 

Shortened week for Easter, with China on holidays too, as we welcome the southern Australian states back to normal (correct) time-zone. It will be a busy week with the RBA and RBNZ. Note that the US are NOT on a trading holiday on Friday and will have their unemployment data out Friday night.

 

The US Fed’s favourite inflation number came out Friday night, a tick lower and so it was all aboard the stock market choo-choo train as the market sees no more inflation, no more rate rises and no risk ahead. Right.

 

Here is a fun stat. For the year to date. The big techs stocks that sit in the S&P500 are +4.6% in 2023. That is 8 stocks out of 500. The other 492 stocks are collectively down 1% 2023. The 8 are, Meta, Apple, Amazon, Netflix, Google, Microsoft, Tesla and Nvidia and combined have increased by $1.8 TRILLION, yes that is a 1.8 thousand billion increase in market capitalisation, whilst the rest of the index fell by $21 billion. Crazy.

 

Even though bonds jumped a little (yield off) when the recession hits in the back half of this year, you wont be able to eat your software. During recession, it is the utilities, consumer staples and healthcare that do well. These are considered defensive stocks. Because it is what people will focus their spending on, not movies, electric cars or iPhones. When you have lost your job and inflation is forcing prices of everything from petrol to bread higher, you will make a choice on where that precious dollar you have goes. And it ain’t discretionary spending, it is the necessities.

 

The stock market to me are misreading the situation, again. Look at the safe haven assets of US dollar, Yen, gold and bitcoin, they are showing you the way.

 

Currency Guidance

 

USD – Bounced off support at 101.70 and it still murky waters. With some investors thinking its party time, others are prepping bunkers. So it could be more choppy than one would like. Technically it is still in a downtrend. And if the trend is your friend you would look to be a seller circa 103.

 

AUD – Cannot hold above 0.67 but is also failing to fall as buyers step in at higher levels each time. I get the feeling with the RBA tomorrow looming, that the sellers will win this one and March lows will be tested.

 

EUR – Double top in place now at 1.09 and for the short term it should rotate back to the mid 1.07s. From there, like the US it is murky waters to be honest.

 

GBP – Gave a perfect sell signal over the PCE numbers on Friday night, failing off 1.24. Should also rotate lower here, at least to the 1.22 if not to the mid 1.19s which is the other side of the range.

 

JPY – Yen continues to weaken, for now and the picture is similar to the US dollar. If you think everything is rosy, you would sell your safe haven assets such as bonds (ie sell yen, sell greenbacks) and buy the big tech stocks. And that seems to be is what is happening…..for now.